RESTRICTED  WORLD TRADE  
ORGANIZATION  WT/DSB/M/199 
11 November 2005 
 (05-5309) 
Dispute Settlement Body 
18 October 2005  
 
 
  
MINUTES OF MEETING 
 
Held in the Centre William Rappard
 
on 18 October 2005  
 
Chairman:  Mr. Eirik Glenne (Norway) 
 
 
Subjects discussed : 
 
1. Surveillance of implementation of recommendations adopted by the DSB.........................2  
(a) United States – Section 211 Omnibus Appropr iations Act of 1998:  Status report by 
the United States .............................................................................................................. ...........2  
(b) United States – Anti-dumping measures on certain hot-rolled steel products from 
Japan:  Status report by  the United States...................................................................................4  
(c) United States – Continued Dumping and Subsidy Offset Act of 2000:  Status report 
by the Unite d States ........................................................................................................... .........5  
(d) United States – Section 110(5) of the US Copyright Act:  Status report by the 
United States .................................................................................................................. .............6  
2. European Communities – Customs classifica tion of frozen boneless chicken cuts.............7  
(a) Implementation of the recommendations of the DSB.................................................................7  
3. United States – Subsidies on upland cotton............................................................................8  
(a) Recourse to Article 7.9 of the SCM Agreemen t and Article 22.2 of the DSU by Brazil ...........8  
4. Adoption of the 2005 draft Annual Report of the DSB .......................................................10  
5. Proposed nomination for the indicative list of governmental and 
non-governmental panelists ...................................................................................................11  
6. Panama – Tariff classification of certain milk products .....................................................11  
(a) Statement by  Mexico ............................................................................................................ ....11  
 
 WT/DSB/M/199 
Page 2  
 
1. Surveillance of implementation of recommendations adopted by the DSB 
(a) United States – Section 211 Omnibus Appropr iations Act of 1998:  Status report by the 
United States (WT/DS176/11/Add.36) 
 (b) United States – Anti-dumping measures on certain hot-rolled steel products from Japan:  
Status report by the United States (WT/DS184/15/Add.36) 
 (c) United States – Continued Dumping and Subsid y Offset Act of 2000:  Status report by the 
United States (WT/DS217/16/Add.21 – WT/DS234/24/Add.21) 
 
(d) United States – Section 110(5) of the US Copyright Act:  Status report by the United States 
(WT/DS160/24/Add.11) 
 1. The Chairman
 recalled that Article 21.6 of the DSU required that "unless the DSB decides 
otherwise, the issue of implementation of the re commendations or rulings shall be placed on the 
agenda of the DSB meeting after six months follo wing the date of establishment of the reasonable 
period of time pursuant to paragraph 3 and shall remain on the DSB's agenda until the issue is 
resolved".  He proposed that the four sub-items to which he had just referred be considered separately. 
(a) United States – Section 211 Omnibus Appropria tions Act of 1998:  Status report by the 
United States (WT/DS176/11/Add.36) 
2. The Chairman  drew attention to document WT/DS176/ 11/Add.36, which contained the status 
report by the United States on progress in the impl ementation of the DSB's recommendations in the 
case concerning US Section 211 Omni bus Appropriations Act of 1998. 
3. The representative of the United States  said that his country had provided a status report in 
this dispute on 6 October 2005, in accordance with Ar ticle 21.6 of the DSU.  As noted in the report, 
several legislative proposals relating to S ection 211 that would implement the DSB's 
recommendations and rulings in this dispute had been  introduced in the current Congress, both in the 
US Senate and the US House of Representatives.  The US administration was working with the US 
Congress to implement the DSB's recommendations and rulings. 
4. The representative of the European Communities  recalled that on 30 June 2005, the 
United States had missed yet another deadlin e for implementation of the DSB's ruling and 
recommendation to bring itself into compliance with  its obligations under the TRIPS Agreement.  
This stood in sharp contrast with the US commi tment to promote effective and non-discriminatory 
protection of intellectual property rights worldwid e.  This double standard weakened not only the 
credibility of the US action, but also more generally  that of the TRIPS Agreement.  Yet four bills 
were pending in the US Congress to repeal Secti on 211.  Adoption of such bills would bring a 
satisfactory solution to this dispute by removing a discriminatory legislation driven exclusively by 
specific interests. 
5. The representative of Cuba  said that, through Section 211, the United States had extended to 
the area of intellectual property the illegal economic , commercial and financia l blockade that it had 
been imposing on Cuba for more than 45 years.  The intention was to appropriate, in US territory, 
Cuban trademarks of renowned international pres tige protected under international conventions and 
treaties to which the United States was also a party.   This was what the dispute under consideration 
was about:  the attempted appropriation by Bacardi , under Section 211 – which was tailor-made for it 
– of the right to use the trademark Havana Club in the United States.  The report by the US delegation 
that Members had just heard was practically a repe tition of what Members had been hearing for more 
than three and a half years. The United States continued to openly violate the recommendations 
adopted by the DSB on 1 February 2002.  At the previous DSB meeting, Members had been reminded  WT/DSB/M/199 
 Page 3 
 
 
that, as stated in Article 3.7 of the DSU:  "[t]he aim of the dispute settlement mechanism is to secure a 
positive solution to a dispute, and a solution mutually acceptable to the parties and consistent with the 
covered agreements is clearly to be  preferred."  Cuba did not questi on that provision.  However, the 
understanding that the EC and the United States had disclosed on 20 July 2005 was not a solution to this dispute.  Indeed, surveillance of implemen tation of the DSB's recommendations on this matter 
was still on the agenda of the regular DSB meetings .  The fact was that the EC/US understanding had 
left the issue of US compliance with the DSB's r ecommendations and rulings in a sort of legal limbo 
by failing to fix a new reasonable period of time for implementation, as stipulated in Article 21.3 of 
the DSU.  This was without precedent in the histor y of the WTO.  Thus, Cuba appealed to Members 
to consider the serious systemic implications of "u nderstandings" of that nature.  Article 3.2 of the 
DSU stated that "[t]he dispute settlement system of the WTO is a central element in providing 
security and predictability to the multilateral tradi ng system … " and " … serves to preserve the rights 
and obligations of Members under th e covered agreements … ".  Pa ragraph 3 of the same Article 
recognized that the prompt settlement of disputes was essential to the effective functioning of the 
WTO.  His delegation wondered how one could speak of security, predictability, or prompt settlement 
when one of the most powerful Members of the WTO systematically failed to comply with the DSB's 
recommendations, and was indeed responsible for no n-compliance with recommendations in the four 
disputes being considered under this  agenda item.  For the sake of the multilateral trading system, 
Cuba demanded, once again, that a prompt solution be  found to this dispute through the revocation by 
the United States of its Section 211 Omnibus Appropriations Act of 1998. 
6. The representative of China
 said that, at the previous DSB meeting, his delegation had made a 
statement under this agenda item and, at the present meeting, wished to only add a few words.  While 
recognizing that the parties to dispute had the right to settle the procedural issues by mutual agreement, China believed that the full implementa tion of the DSB's rulings, namely withdrawal of 
the illegal measure, was the best desired result.  China noted that the US measure nullified not only 
the interest of the EC under the WTO covered ag reements, but also the interests of other WTO 
Members, such as Cuba.  Although every WTO Member had the right to have recourse to the dispute 
settlement mechanism, it was a heavy burden for de veloping countries to do so, especially for those 
developing countries that lacked human and financia l resources.  It was quite understandable that 
Cuba expected to benefit from the full implementa tion of the DSB's ruling in this dispute and to 
closely monitor the status of implementation.  Once again, China wished to jo in the EC and Cuba in 
urging the United States to implement the DSB's decision in this dispute as soon as possible. 
7. The representative of Venezuela
 said that his delegation wished to be fully associated with the 
statement made by Cuba on this matter.  Venezuel a considered that the indefinite postponement of 
compliance with the DSB's recommendations and ruli ngs was merely a way to continue to apply 
Section 211, which the Appellate Body  had found to be inconsistent with WTO rules.  Venezuela was 
concerned about systemic implications that this issu e raised such as the lack of transparency, and the 
fact that the complaining party had apparently ab andoned its claims regarding the implementation of 
the recommendations and rulings – an unprecedented development in the WTO.  Finally, Venezuela 
urged the United States to make every possible effort  to modify the challenged legislation as quickly 
as possible and to comply with WTO rules. 
8. The representative of Brazil  said that his country had not participated as a third party in the 
dispute under consideration.  However, given the relevance of what Members had been witnessing in 
respect of implementation, Brazil wished to raise some systemic considerations.  He said that, by 
stating twice – in Articles 3.3 and 21.1 of the DSU – that prompt compliance was essential for the proper functioning of the WTO and the maintenan ce of a proper balance between the rights and 
obligations of Members, the DSU negotiators had not  taken that obligation lightly.  This was not only 
because of the number of times references had been made to it in the DSU, but also, and more 
importantly, due to the weight Members attached to th at obligation.  It was, thus, clear that prompt 
compliance, which was qualified twice as essential, was one of the cornerstones of the DSU.  Brazil 
also recalled that Article 3.7 of the DSU determined that, in the absence of a mutually agreed solution, WT/DSB/M/199 
Page 4  
 
the first objective of the dispute settlement mechan ism was usually to secure the withdrawal of the 
measures concerned if these were f ound to be inconsistent with the provisions of any of the covered 
agreements.  The procedural arrangement between the United States and the EC in the present dispute 
did not constitute a mutually agreed solution.  Brazil was not taking issue with the procedural 
agreement.  The DSB had been notified of, a nd had taken a decision regarding this matter on 
20 July 2005.  Brazil only noted that the DSB's deci sion should not be read as a licence for indefinite 
continuation of the non-compliance situation, which had lasted for too long in the present dispute.  
Brazil urged the parties to the dispute to take adva ntage of the positive momentum that had led to the 
bilateral agreement on procedures:  i.e. either to r each a mutually satisfactory solution consistent with 
the multilateral rules and beneficial to all Member s, or to develop ways towards an expedited 
withdrawal of the illegal measure. 
9. The representative of Mexico
 said that his delegation noted the statements made by previous 
speakers.  Mexico was aware that Cuba had a trade in terest in this dispute and, therefore, understood 
Cuba's frustration at the failure to resolve this ma tter within the reasonable period of time.  Ideally, 
the matter should be settled without the need for Cuba  to initiate its own case.  Mexico did, however, 
consider that Cuba's rights under the DSU were still valid. 
10. The representative of the United States  said that his delegation th anked those delegations who 
had recognized that the parties to this dispute had notified their procedural agreement to the DSB, and 
that the DSB had taken a decision on this matter after the parties had explained that it would assist the parties to resolve this dispute.  The United States re iterated that it would continue to work with the 
other party to this disput e in seeking to resolve it. 
11. The DSB took note
 of the statements and agreed  to revert to this matter at its next regular 
meeting. 
(b) United States – Anti-dumping measures on certain hot-rolled steel products from Japan:  
Status report by the United States (WT/DS184/15/Add.36) 
12. The Chairman  drew attention to document WT/DS184/ 15/Add.36, which contained the status 
report by the United States on progress in the impl ementation of the DSB's recommendations in the 
case concerning US anti-dumping measures on certain hot-rolled steel products from Japan. 
13. The representative of the United States  said that his country had provided a status report in 
this dispute on 6 October 2005, in accordance with Article 21.6 of the DSU.  As of 23 November 2002, the US authorities had addresse d the DSB's recommendations and rulings with 
respect to the calculation of anti-dumping margins in the hot-rolled steel anti-dumping duty 
investigation at issue in this dispute. He noted that details were  provided in document 
WT/DS184/15/Add.3.  The US administration conti nued to support specific legislative amendments 
that would implement the DSB's recommendations a nd rulings with respect to the US anti-dumping 
duty statute, and was working with the US Congress to pass these amendments.  In that connection, 
on 19 May 2005, legislation had been introduced in the US House of Representatives (H.R. 2473) that 
would implement the DSB's recommendations and ruli ngs with respect to the US anti-dumping duty 
statute.  The US administration would continue to work with the US Congress to enact legislation to implement the DSB's recommendations and rulings. 
14. The representative of Japan
 said that his country noted the statement made by the 
United States as well as its most recent status report that the US administration would continue to work with the US Congress to enact legislation H.R. 2473.  As Japan had previously stated before the 
DSB, the implementation of the recommendations and rulings by the Member concerned in an 
adequate and prompt manner was essential for th e effective functioning of the dispute settlement 
system.  Japan strongly urged the US administration and the US Congress to intensify their efforts toward securing the passage of that bill at the earliest possible opportunity.  WT/DSB/M/199 
 Page 5 
 
 
15. The DSB took note  of the statements and agreed  to revert to this matter at its next regular 
meeting. 
(c) United States – Continued Dumping and Subsidy Offset Act of 2000:  Status report by the 
United States (WT/DS217/16/Add.21 – WT/DS234/24/Add.21) 
16. The Chairman  drew attention to document WT/D S217/16/Add.21 – WT/DS234/24/Add.21, 
which contained the status report by the United St ates on progress in the implementation of the DSB's 
recommendations in the case concerning the US Conti nued Dumping and Subsidy Offset Act of 2000. 
17. The representative of the United States  said that his country had provided a status report on 
6 October 2005, in accordance with Article 21.6 of th e DSU.  As noted there, the US administration 
had proposed repeal of the CDSOA in its budget proposal  for fiscal year 2006.  In addition, legislation 
that would repeal the CDSOA ha d been introduced in the US House of Representatives.  On 
9 September 2005, an amendment to appropriations legi slation had been filed in the US Senate.  The 
amendment would prohibit the distribution of CDS OA funds unless distribution of such funds would 
not be inconsistent with US WTO obligations.  Th e US administration would continue to work with 
the US Congress to enact legislation, and to confer with the complaining parties in these disputes, in 
order to reach mutually satisfactory resolutions of these matters. 
18. The representative of th e European Communities  said that on 1 October 2005, a new round of 
distribution under the CDSOA had started.  This was the fifth distribution since the enactment of this 
legislation, and the second after the date on whic h the United States had been required to bring its 
legislation into conformity with its WTO obliga tions.  This would add to more than US$1 billion 
distributed thus far, and would cause further damage  not only to the EC or other complainants, but 
also to the whole WTO Membership.  The EC rec ognized the recent initiatives taken in an effort to 
bring a solution to this dispute:  (i) the invitation by the US House Ways and Means Sub-Committee on Trade to interested parties to comment on the inclusion in a miscellaneous trade bill of a bill 
repealing the Byrd Amendment; an invitation which had triggered more comments in favour of repeal 
than against;  and (ii) a proposal in the Senate that  would provide at least a temporary solution to this 
dispute.  These were welcome positive signs especially  after a long period of apparent total lack of 
interest in the US Congress.  But, these should no t be hollow promises.  Concrete steps should now 
follow to repeal the Byrd Amendment without further delay. 
19. The representative of Brazil
 said that his country noted the status report provided by the 
United States in the context of the present dispute.  Brazil wished to reiterate its concerns about the 
absence of meaningful progress in the implementa tion of the DSB's rulings and recommendations, in 
particular as one were to approach December, which would be the second anniversary of the 
expiration of the rather long reasonable period of tim e for implementation in this dispute.  Brazil also 
wished to note that, at the request of the US Congress, the US General Accounting Office (GAO) had 
issued a report in September 2005 entitled: "Issu es and Effects of Implementing the Continued 
Dumping and Subsidy Offset Act of 2000".  The report made clear that payments under the Byrd 
Amendment benefited only a very small number of  companies in the United States while breaching 
the multilateral rules.  In accordan ce with the GAO's report, only five (out of 770) companies had 
received about 50 per cent of the more than US$1 billion distributed from 2001 through 2004 fiscal years.  Brazil was not saying that, were the United States to concentrate less its disbursements under 
the CDSOA, the measure would be less WTO-inconsistent or less harmful.  The figures in the said report showed, however, how groundless was the ar gument supporting the lack of compliance based 
on the allegedly widespread positive effects of the Byrd Amendment to US industries and workers.  
Finally, even putting aside all the ot her relevant elements at stake in this matter, which – he stressed – 
were of paramount importance for the credibility of the system, these numbers alone – US numbers, not the complainants' numbers – should convince the United States of the urgency of stepping up the 
efforts to repeal the Byrd Amendment. WT/DSB/M/199 
Page 6  
 
20. The representative of Canada
 said that his country noted the most recent status report of the 
United States on the Continued Dumping and Subsidy Offset Act of 2000.  As previously stated, 
Canada was disappointed that US inaction had re quired Canada and other WTO Members to impose 
trade restrictive measures in order to induce US  compliance with its WTO obligations.  Canada 
welcomed the inclusion of the bill to repeal th e Byrd Amendment (Ramstad Bill HR 1121) in the 
Miscellaneous Trade Legislation, currently being considered in the US Congress. The US House 
Ways and Means Sub-Committee on Trade had receive d numerous submissions from a broad range of 
stakeholders calling for the repeal of the Byrd Am endment.  Canada urged the Committee to consider 
these submissions carefully, including Canada's lett er to the Committee, in order to expedite the 
repeal of the Byrd Amendment.  Canada was enc ouraged by the recent release of a report published 
by the US General Accounting Office on the Byrd Amendment.  The report made note of the 
retaliatory measures taken by some of the US most important trading partners as a direct result of the 
US failure to comply with the WTO ruling. Quite tellingly, the report had also found that the Byrd Amendment served to undermine the effectiveness of trade remedies generally, a position that had 
been stated, and re-stated, by many Members in th e WTO.  The report was only one of several reports 
released by different US agencies on the Byrd Amendment. He recalled that the US Congressional 
Budget Office had released a report in March 2004 sta ting that the distributions mandated by the Byrd 
Amendment encouraged the filing of more trade remedy cases; subsidized the firms receiving the 
payments; increased the cost of operating the trade laws;  and discouraged the settlement of cases by 
US firms.  These were only some of the compelli ng reasons, as expressed by US agencies themselves, 
as to why the Byrd Amendment must be repealed .  Canada, once again, wished to take this 
opportunity to call upon the United States to end this  dispute and to repeal the Byrd Amendment. 
21. The representative of Japan
 said that it was regrettable that the persistent failure of the 
United States to implement the DSB's recommenda tions and rulings in this dispute had made it 
imperative for Canada, the EC, Mexico and Japan to resort to a last-resort remedy, provided for under 
Article 22 of the DSU.  As a result, the suspension of concessions or other obligations by these four 
Members remained in place.  Japan noted the status report by the United States that there had been a 
few new movements in and around the US Congress over the past several months.  At the same time, Japan was worried about another round of illegal disbursements under the WTO-inconsistent CDSOA 
with detriment to the legitimate rights and interest s of Japan and other Members.  Japan was eager to 
see more reliable and tangible signs toward the re peal of the CDSOA and Japan, once again, called on 
the United States, in this case as well, to intensif y its efforts toward securing the implementation of 
the DSB's recommendations and rulings. 
22. The DSB took note
 of the statements and agreed  to revert to this matter at its next regular 
meeting. 
(d) United States – Section 110(5) of the US Copyright Act:  Status report by the United States 
(WT/DS160/24/Add.11) 
23. The Chairman  drew attention to document WT/DS160/ 24/Add.11, which contained the status 
report by the United States on progress in the impl ementation of the DSB's recommendations in the 
case concerning Section 110(5) of the US Copyright Act. 
24. The representative of the United States  said that his country had provided a status report in 
this dispute on 6 October 2005, in accordance with Ar ticle 21.6 of the DSU.  As noted in the report, 
the US Administration continued to work with the US Congress, and to confer with the EC, in order 
to reach a mutually satisfactory resolution of this matter. 
25. The representative of the European Communities  said that the dispute on Section 110(5) of 
the US Copyright was the last issue under the first item on the agenda of the present meeting, which had exclusively been devoted to the US in ability or unwillingness to implement the DSB's 
recommendations and rulings.  However, that last issu e was also the oldest one:  indeed, more than  WT/DSB/M/199 
 Page 7 
 
 
five years after the adoption of the Panel Report, the EC and all other Members had still not seen the 
slightest prospect for compliance.  The EC feared  that the United States was not effectively working 
on the enhancement of copyright protection within its jurisdiction, thereby affecting the rights and 
expected benefits of other Members. And, striki ngly, the maintenance of substandard intellectual 
property legislation in the United States affected fi rst and foremost its own citizens and creators.  The 
EC urged the United States to put an end to a situati on that had lasted for too long.  As a first step, the 
EC would expect that the United States describe, in its next status report, the actual initiatives that had 
been or that would be undertaken in order to co mply with the DSB's recommendations and rulings.  
Finally, the EC wished to recall that it had reserved its right to reactivate, at any point in time, the 
arbitration proceeding on retaliation in this dispute. 
26. The representative of the United States  said that his delegation regretted that the EC was 
again making unfounded comments on the US record on intellectual property rights, and  wished to refer delegations to the comments made at recent DSB m eetings in that regard.  In that connection, the 
United States had also noted the EC's comment made  at the previous DSB meeting that, judging from 
two disputes, the United States seemed impotent to live up to its TRIPS obligations, and the EC's 
question: "what lesson should the other Members of this  Organisation draw from this fact?"  In that 
connection, the United States wished to recall se veral disputes involving findings against the EC:  
Sugar, Bananas, Beef, Frozen Chicken, Butter, P oultry, and Geographical Indications for Agricultural 
Products.  The United States also recalled the EC's re quest, in the previous week, for an extension of 
its waiver in the Bananas dispute, in which the EC had failed to comply with the DSB's 
recommendations and rulings for eight years.  It would seem, based on the EC's logic, that it was 
impotent to live up to its WTO obligations in the area of agriculture.  He  then asked "What lesson 
should other Members of this Organization draw from this fact?" 
27. The representative of the European Communities
 said that his delegation wished to 
understand better whether the US intention was to seek a waiver in order to comply with the 
recommendations in  the dispute under consideration. 
28. The DSB took note  of the statements and agreed  to revert to this matter at its next regular 
meeting. 
2. European Communities – Customs classifica tion of frozen boneless chicken cuts 
(a) Implementation of the recommendations of the DSB 
29. The Chairman  recalled that in accordance with the DSU provisions, the DSB was required to 
keep under surveillance the implementation of reco mmendations and rulings of the DSB in order to 
ensure effective resolution of disputes to the benefit of all Members.  In this respect, Article 21.3 of 
the DSU provided that the Member concerned shall in form the DSB, within 30 days after the date of 
adoption of the panel or Appellate Body report, of its intentions in respect of implementation of the 
recommendations and rulings of the DSB.  He reca ll that at its meeting on 27 September 2005, the 
DSB had adopted had the Appellate Body Report pertaining to the disputes on:  "European 
Communities – Customs Classification of Frozen B oneless Chicken Cuts" and the Panel Reports on 
the same matter, as modified by the Appellate Body Report.  He  then invited the EC to inform the 
DSB of its intentions in respect of im plementation of the DSB's recommendations. 
30. The representative of the European Communities  recalled that at the DSB meeting on 
27 September 2005, the EC had explained its concer ns regarding the systemic implications of the 
Appellate Body Report and the Pane l Reports, which did not need to be repeated again.  At the 
present meeting, the EC wished to indicate that it  intended to implement the relevant DSB's rulings 
and recommendations in an appropriate manner.  In view of the various highly technical issues 
involved, the EC was unable to proceed to imme diate implementation and, therefore, needed a 
reasonable period of time.  In the coming days, the EC would contact the complainants in order to WT/DSB/M/199 
Page 8  
 
explore ways to agree on a mutually acceptable period of time, in accordance with Article 21.3(b) of the DSU. 
31. The representative of  Brazil
 said that his country had noted the EC's statement regarding its 
intention to implement the DSB's recommendations in  the present dispute.  As observed by Brazil at 
the 27 September 2005 DSB meeting – when the Repor ts of the Panel and the Appellate Body had 
been adopted – the process of implementation of th e DSB's rulings by the EC should be an expedited 
procedure. The condemned measures – Regula tion No. 1223/2002 and Decision 2003/97/EC – had 
been enacted by the European  Commission. Therefore, the accomplishment of the DSB's 
recommendations should be a rather simple and st raightforward process. There was no reason why the 
EC could claim that it could not promptly implement the DSB's decisions.  The best way to comply 
with those recommendations was by immediately withdrawing the inconsistent measures and by 
ensuring that subsequent legislation did not impede the classification of the product under 
heading 02.10.  Brazil expected the EC to abide by the DSB's rulings in the shortest possible period of 
time, which would be a clear indication that the EC  remained attached to its multilateral commitments 
under the WTO Agreements.  Brazil stood ready to consult with the EC at the earliest opportunity on 
a reasonable period of time for implementation. 
32. The representative of Thailand  said that his country had noted the statement made by the EC 
at the present meting and welcomed the EC's inte ntion to comply with the DSB's decisions and 
recommendations.  Thailand recalled that Article 21. 1 of the DSU provided that prompt compliance 
with the DSB's recommendations or rulings was "essen tial in order to ensure effective resolution of 
disputes to the benefit of all Members."  Thailand also recalled that Article 21.3 of the DSU called for 
immediate compliance with such recommendations a nd rulings, and thus regretted that the EC had 
indicated that it would not immediately comply in this instance.  However, as the EC had moved 
expeditiously in the past to adopt amendments to its Combined Nomenclature, Thailand remained 
hopeful that the EC could – and would take prompt and effective action to adopt the required changes 
to implement the DSB's rulings in this case.  Accordingly, the EC should implement the DSB's rulings 
as promptly and expeditiously as possible.  Therefor e, despite the EC's disappointment with the lack 
of immediate compliance by the EC, Thailand stood ready to discuss with the EC a reasonable period 
of time for implementation that reflected the shorte st period possible within the EC's legal system. 
Thailand also looked forward to discussing with the EC the modalities for prompt implementation in these circumstances. 
33. The DSB took note
 of the statements, and of the information provided by the 
European Communities regarding its intentions in respect of implementation of the DSB's 
recommendations. 
3. United States – Subsidies on upland cotton 
(a) Recourse to Article 7.9 of the SCM Agreem ent and Article 22.2 of the DSU by Brazil 
(WT/DS267/26) 
34. The Chairman  drew attention to the communicati on from Brazil contained in document 
WT/DS267/26, and invited the representative of Brazil to speak. 
35. The representative of Brazil  recalled that on 21 March 2005, the DSB had adopted the 
Reports of the Panel and the Appellate Body in th is dispute. Since that date, the United States had 
been under the obligation to withdraw the subsidies found to cause serious prejudice to the interests of 
Brazil or remove their adverse effects, pursuant to Article 7.8 of the SCM Agreement.  The subsidies 
at issue included marketing loan assistance payments, user marketing (Step 2) payments, market loss 
payments and counter-cyclical payments to upland cotton.  The adopted Panel and Appellate Body 
Reports had concluded that these subsidies caused serious prejudice to Brazil by means of significant suppression of international prices, in violation of  Articles 5 and 6.3(c) of the SCM Agreement.   WT/DSB/M/199 
 Page 9 
 
 
Regrettably, the United States had not withdrawn or modified these subsidies within six months 
following the adoption of the Reports:  i.e. by 21  September 2005, as required by Article 7.9 of the 
SCM Agreement.  In light of the situation just d escribed, Brazil had decided to reserve its rights by 
requesting authorization to take countermeasures in the annual amount of US$1.037 billion until such 
time as the United States withdraw the above-mentioned subsidies or remove their adverse effects, as 
explained in document WT/DS267/26. Brazil he reby requested that the DSB approve the 
authorization, as set out in its request. 
36. As stated in Brazil's request, these countermeasure s, in principle, would take the form of 
suspension of tariff concessions and related ob ligations under the GATT 1994 by means of the 
imposition of additional import duties on a list of products imported from the United States, to be 
defined by Brazil.  However, it was not practicable or effective to suspend concessions or other 
obligations with respect to the same sector/agree ment as that in which the Panel and the Appellate 
Body had found the violations.  Brazil also believe d that the circumstances were serious enough to 
justify the suspension of concessions or obligatio ns under the TRIPS Agreement and the GATS, as 
indicated in its request. 
37. He said that it was worth noting that the presen t request related to actionable subsidies, and 
did not invalidate or supersede Brazil's request of July 2005 concerning prohibited subsidies, which 
should have been withdrawn by 1 July 2005. 
38. He recalled that at the 15 July 2005 DSB mee ting, Brazil had signalled its expectations that 
the United States would take the necessary steps to  withdraw the illegal measures in question or 
remove their adverse effects within the prescrib ed deadline.  Brazil ha d also acknowledged that 
measures taken and the announcemen ts made by the United States w ith reference to the prohibited 
subsidies in this case had constituted a positive st ep towards the resolution of this dispute.  
Furthermore, Brazil had expressed its hope that th e US Congress would follow up with concrete and 
timely actions that could enable a mutually satisfact ory resolution of this dispute.  Brazil was still 
hopeful that the actual application of retaliatory  measures might not be necessary.  Brazil's own 
estimates indicated that US subsidies on cotton in marketing year 2004, howeve r, might have been the 
largest ever, over US$4 billion.  This was far from being an encouraging sign not only to Brazil, but also to all those who supported the end of trade-di storting subsidies in agriculture.  In conclusion, 
Brazil regretted the lack of compliance by the United States with the DSB's recommendations, and noted, once again, that full implementation was essen tial for the credibility of the multilateral trading 
system. Even more so when additional rights and ob ligations to promote the reform of agriculture 
were being negotiated under the Doha Round. 
39. The representative of the United States
 said that by letter, dated 17 October 2005, the 
United States had notified the DSB that it objected to Brazil's request for authorization to suspend 
concessions or other obligations pursuant to Artic le 22.2 of the DSU and Article 7.9 of the SCM 
Agreement.  Under the terms of the DSU (and, c onsequently, Article 7.10 of the SCM Agreement), 
the filing of such an objection automatically resulted in the matter being referred to arbitration, and no 
further action was required by the DSB.  Indeed, Article 22.6 of the DSU did not refer to any decision by the DSB.  Consequently, the matter was already being referred to arbitration.  Nevertheless, the 
United States had no objection if the DSB wished to take note of that fact and confirm that it may not, therefore, consider Brazil's request for authorizati on, which was on the agenda of the present meeting.  
Although the United States had registered its obj ections to Brazil's request, and had thereby 
commenced the arbitration process, the United Stat es believed that further proceedings were not 
necessary. 
40. He recalled that at the 21 April 2005 DSB m eeting, the United States had announced its 
intention to implement the DSB's recommendations  and rulings in this dispute and had taken 
appropriate steps to do so.  For example, on 5 July 2005,  the US administration had announced a 
legislative proposal to repeal the user marketing Step 2 cotton programme.  Repeal of the Step 2 WT/DSB/M/199 
Page 10  
 
programme would mitigate the price effects found to be  caused by certain measures in this dispute.  
The US administration had been working actively with the US Congress to get this legislation enacted.  In addition, reductions in payments under other domestic support programs, including those 
that were being discussed in the dispute, had been  proposed by the US administration as part of its 
budget proposal and were being cons idered by the US Congress. The United States was confident that 
this dispute could be resolved without need for further proceedings. 
41. The representative of  the European Communities
 said that the EC had participated as a third 
party in this dispute and continued to follow with  great interest the developments in terms of 
implementation.  In that respect, the EC would be  interested to obtain further information on two 
points. First, he recalled that, in July 2005,  the United States and Brazil had concluded an 
understanding regarding the procedures under Articl es 21 and 22 of the DSU and Article 4 of the 
SCM Agreement.  That "sequencing agreement" onl y covered the prohibited subsidies and the related 
request for the authorization of countermeasures presented by Brazil at the DSB meeting on 15 July 2005.  The EC, therefore, wished to know whether there would be another "sequencing 
agreement" that would cover actionable subsidi es and the present request for authorization of 
countermeasures.  Second, the EC wished  to know whether, and if so how, Brazil had sought to, or 
would, ensure that there was no overlap betwee n the amount of countermeasures presented to the 
DSB in July 2005 and the amount presently requested in terms of the specific US measures against which these countermeasures were directed. 
42. The representative of Brazil
 said that the questions raised by the EC would be duly conveyed 
to his capital. 
43. The representative of the United States  said that his delegation would also refer the EC's 
questions to capital. 
44. The DSB took note  of the statements and it was agreed  that the matter raised by the 
United States in document WT/DS267/27 is referred to  arbitration, as required by Article 22.6 of the 
DSU. 
4. Adoption of the 2005 draft Annual Report of the DSB (WT/DSB/W298 and Add.1) 
45. The Chairman  said that, in pursuance of the procedures for an annual overview of WTO 
activities and for reporting under the WTO contained in document WT/L/105, he was submitting for 
adoption the draft text of the 2005 Annual Report of the DSB contained in document WT/DSB/W/298 
and Add.1.  The report covered the work of the DS B since the previous annual report contained in 
document WT/DSB/37 and Add.1.  For practical purposes, the overview of the state of play of WTO 
disputes covering the period from 1 January 1995 to  30 September 2005, prepared by the Secretariat 
on its own responsibility, was include d in the addendum to this report.  He proposed that after the 
adoption of the Annual Report at the present meeting, the Secretariat be authorized to update this 
Report under its own responsibility in order to incl ude actions taken by the DSB at the present  
meeting.  The updated Annual Report of the DSB w ould then be submitted for consideration by the 
General Council at its meeting on 1 December 2005 
46. The DSB took note  of the statement and adopted  the draft Annual Report of the DSB 
contained in WT/DSB/W/298 and Add.1 on the unders tanding that it would be further updated by the 
Secretariat.1 
                                                      
1 The Annual Report was subsequently circulated in document WT/DSB/39 and Add.1.  WT/DSB/M/199 
 Page 11 
 
 
5. Proposed nomination for the indicative list of governmental and non-governmental 
panelists (WT/DSB/W/299) 
47. The Chairman  drew attention to document WT/DSB/W /299, which contained an additional 
name proposed for inclusion on the indicative list of  governmental and non-governmental panelists, in 
accordance with Article 8.4 of the DSU.  Unless th ere was any objection, he wished to propose that 
the DSB approve the name contained in document WT/DSB/W/299. 
48. The DSB so agreed . 
6. Panama – Tariff classification of certain milk products 
(a) Statement by Mexico 
49. The representative of Mexico , speaking under "Other Business", said that his delegation was 
pleased to inform Members that Mexico and Panama  had reached a mutually agreed solution in the 
dispute: "Panama – Tariff Classification of Certain Milk  Products".  That solution had been notified to 
the DSB and had subsequently been circulated on 6 October 2005 in document WT/DS329/2.  Mexico 
thanked Panama for its work and said that its endeavours, good faith and prompt responses had 
allowed this dispute to be settled in a favourab le and positive manner. Mexico reiterated its 
commitment to continue working with Panama, an  important trading partne r, and hoped that their 
relations would remain construc tive. Finally, Mexico underlined that it had reached mutually 
satisfactory settlements in virtually all disputes with  its Latin American trading partners.  Mexico 
hoped to be able to continue working in this vein. 
50. The DSB took note  of the statement.  
 
__________